Government and Industry Join Forces to Build Privacy into Location Analytics Tech

More retailers are tracking shoppers via their mobile devices, but government and industry players are now trying to build privacy standards and tools into the technology --,before issues over privacy get out of hand. Senator Charles Schumer, Democrat of New York, announced an initiative to that end on Tuesday with the support of several mobile tracking technology firms and The Future of Privacy Forum, a group that aims to help protect consumer privacy without squelching tech innovation.

"The time to impact these technologies is when they're still being built," said Jules Polonetsky, executive director of the Future of Privacy Forum.

Mobile tracking technologies that would be affected by the code of conduct often work by tracking the media access control, or MAC, addresses associated with shoppers' mobile devices. The systems are used to gauge checkout wait times and to trace customer footpaths around stores or restaurants. Most shops using these technologies say that they don't want to track people on an individual level and that the tracking systems usually only provide analytics data in aggregate.

Still, controversy remains regarding MAC addresses and whether they are personally identifiable. So the code of conduct requires the participating tracking tech firms -- Euclid, iInside, Mexia Interactive, Solomo, Radius Networks, Brickstream and Turnstyle Solutions -- to automatically "hash," or de-identify, the phone ID information they've collected. It also calls on them to delete the tracking data eventually. At this stage, however, the code of conduct does not establish a maximum length of time companies can store the information, said Mr. Polonetsky.

The effort also intends to let people use their phones to opt out from in-store mobile tracking, but that capability is a ways off. The Future of Privacy Forum is working with tech partners to develop a universal tool that will allow people to opt out from tracking by all the tech firms participating in the program. The tool will take another six months to develop, Mr. Polonetsky said.

Not every mobile tracking company is involved with the initiative yet, including Nomi, which has the technology deployed in stores and restaurants in Mr. Schumer's state, among others. The company's tech gathers mobile-device IDs as people enter stores using either the merchant's WiFi network or small sensors that track mobile devices' radio signals down to three meters or better. According to Mr. Polonetsky, the company is under evaluation by the Future of Privacy Forum but has not been approved under the conduct code.

Another mobile device tracking firm, Path Intelligence, also is not involved, despite the fact that the company attracted the ire of Mr. Schumer in 2011 when its technology was deployed in malls. Mr. Schumer sent a letter to the tracking firm suggesting that it should require consent from device owners before tracking them. Malls in the U.S. that had tried the technology reportedly stopped using it as a result.

Future of Privacy Forum is in discussions with Path Intelligence about participation. The company has not responded to a request for comment.

The code also asks retailers to play a role. Stores using participating technologies will be required to post conspicuous signs notifying people that such tracking is taking place. The Future of Privacy Forum is working with a designer to craft a standard sign that can be used in stores.

While the code of conduct is not a law or regulatory requirement at this point corporations can expect some government oversight, according to Mr. Polonetsky.

"We ran our code by the FTC, we ran it by Senator Schumer, and each of them was eager to see an easy-to-use opt-out and communication with consumers," said Mr. Polonetsky. "The FTC is in a position to enforce the commitments that the companies make," he added.

For years retailers have used camera-based systems to track people in stores for security and analytics purposes. The new code doesn't cover the camera technologies, Mr. Polonetsky said.

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Kate Kaye

Kate Kaye covers the data industry for Advertising Age and is the main contributor to the Ad Age DataWorks section. Before joining Ad Age in November 2012, Kate worked as a writer and reporter covering the digital marketing industry since 2000, focusing on beats including data-driven targeting, privacy, and government regulation. Kate helped cultivate the online political campaign beat, and in 2009 wrote "Campaign '08 A Turning Point for Digital Media," a book about the digital media efforts of the 2008 presidential campaigns. Before joining Ad Age, Kate was managing editor of ClickZ News, where she worked for nearly 7 years.